If immigration was slashed, Canada's economy would feel the pinch: report

Due to Canada’s small population and aging workforce, a new Conference Board of Canada report predicts that eliminating immigration would have a negative impact on the Canadian economy by 2040.

“Immigration contributes to the economy in several ways,” explained Kareem El-Assal, senior research associate with the Conference Board. “They are going to contribute to our labour force, but they’re also going to contribute in terms of economic activity.”

According to 2016 data from Stats Canada, immigrants make up approximately 22 per cent of Canada’s population. The Conference Board report goes further in predicting that Canada’s population growth will be driven entirely by immigrants by the year 2040, compared to the 71 per cent of population growth that immigration is currently responsible for.

The report looks at two scenarios; the first explores the potential impact on Canada’s economy should the flow of immigrants into the country stop entirely, or be dramatically reduced; the second looks at the results of raising immigration levels to one per cent, up from 0.8 per cent in 2017.

In addition to supporting economic activity across the country, bringing in young, working-age immigrants also helps address the issue of Canada’s aging population. The report states that in a Canada where immigration was abandoned entirely, 26.9 per cent of the population would be 65 and over by 2040. In addition, Canada’s potential economic growth would slow from 1.9 per cent to an average of 1.3 per cent annually without immigration.

One expert however, warned against increasing immigration levels too fast, as native-born Canadians continue to out-earn immigrants in the labour force by a margin of almost 20 per cent in their early 20s.

Christopher Worswick, a professor at Carleton University, explained that while there are several viable reasons to increase Canadian immigration, he’d caution against increasing levels too drastically, too quickly.

“I worry a little bit when people say we need one per cent immigration to solve all our problems. Well, that’s a very high level,” he explained.

He clarified that while he believes there are “huge benefits to immigration,” there are many variables to consider when discussing what percentage of the total population they should comprise. Some of these include projected salary milestones that immigrants in Canada were expected to meet over the past few decades that they’ve yet to achieve, and the risks that automation pose to Canada’s entire workforce.

“If self-driving cars are realistic inside 15 years, suddenly both taxi drivers and Uber drivers aren’t going to have work,” he said as an example. If whole populations are forced out of work due to automation, immigrants that came to Canada to work will likely wind up among the newly unemployed.

Furthermore, Worswick notes that increasing immigration levels to one per cent could potentially change the composition of immigrants coming to Canada, and their potential to populate the high-skilled labour sectors of the economy currently in need of recruits.

“We are already taking the relatively stronger applicants, and if you run out of them, you could expect that to drop,” he said.

“Over time, I’d like to see us move toward a world without borders, but in the interim, I think we need to be a bit cautious,” he said.

Victoria Esses, the head of the Esses Lab for the Study of Intergroup Relations at Western University, agrees with the findings of the report.

“Without immigration, our labour force would shrink. Immigrants contribute significantly to the labour force because they come in at a fairly young age, and they have many years of work ahead of them,” Esses explained.

She notes however, that with an increase in immigration levels, it’s important for governments to dedicate time and resources into integrating them into Canadian society.

“It is important to increase immigration levels. I think that will be beneficial if we do a good job of integrating immigrants. One thing that’s happening now is that immigrants will be far less likely to have English and French language skills. Immigrants are underemployed,” she said

She emphasized that the federal government has done a good job at introducing the necessary support systems like language training and career mentorship.

This past November, the Canadian government released an updated immigration plan, which sought to bring a total of 310,000 additional newcomers to Canada in 2018, with increases every year thereafter until 2020. By 2020, the yearly total will hit 340,000.

This will still represent less than one per cent of Canada’s population, and remains short of recommendations made two years earlier by the federal government’s economic advisory council — a group of advisers to Finance Minister Bill Morneau.

The council previously recommended that boosting immigration by 50 per cent (from 300,000 to 450,000 people annually) over the following five years, a number which a previous Conference Board of Canada report suggests is both achievable and necessary.